Talking Strategy with Atlantic Health CFO

Atlantic Health System’s CFO Kevin Lenahan says he spends most of his time “developing where Atlantic is going for the next five years.” Putting numbers on a strategic plan is only part of this. The face-to-face is crucially important: “Continuing to meet with other systems, with other partners.”

Tellingly, Atlantic Health System expects joint ventures, not mergers, to be the best way forward. In September 2013, Atlantic Health System and six other major health care systems in New Jersey and Pennsylvania jointly created AllSpire Health Partners, a consortium of 25 high-performing hospitals, to address saving money and improving quality by sharing best practices. Morristown Medical Center, for one, will be sharing its clinical practice knowledge in gynecology, cardiology, and geriatrics — areas where it ranks in the top 50 hospitals in the nation.

On the savings side, Lenahan hopes to see AllSpire make a commitment to, for instance, selecting a designated lab corporation as a single provider to which AllSpire members would send all their specialized pathology (called reference lab work), resulting in a good-sized discount. Lab costs can be very high; lowering them would serve the goal of making health care more affordable overall.

Says Lenahan, margin pressure caused by reduced reimbursement from Medicare is not going away. As it continues, “we’re going to have to find a way to reduce our costs. So if we can do it on the supply side, that is always the most ideal.”